In recent years, insurance carriers across the United States have had to implement rate increases. As frustrating as it may be, it is an unfortunate thing to expect. Let’s dive deeper in explaining why we are seeing this trend.
Whether you are looking to purchase or lease a vehicle or home, there has been extremely low inventory in the markets. Whenever we see low inventory and high demand, inflation follows and prices increase.
Your auto and homeowners insurance premiums are partially based on the value of your property. Especially during times of inflation, this may be a reason you are seeing a rise in your insurance.
Increase of Major Losses
Catastrophic events have been occurring more often. We are also seeing these traumatic events happening in areas that are not normally prone to these exposures. When catastrophes hit a certain area, insurers must raise rates accordingly. Insurance carriers base this on the amount of claims paying out to rebuild or replace.
In 2022 alone, there were 18 major weather events. These disasters caused $165 billion in damages. On August 8th, the National Centers for Environmental Information released that there have been 15 severe weather events in 2023. The price to repair has already exceeded $1 billion.
Unfortunately, this statistic was released the same day the fires in Maui began. The data has not been updated to include this new disaster.
In addition to natural disasters, vehicle theft and accidents are at an all time high. If these things occur frequently within a certain area, insurance carriers must raise rates to everyone in the parameter. This will affect your homeowners or auto insurance rates, regardless of you filing a claim or not.
Increased Cost to Repair
When rebuilding or repairing damaged property, there are many puzzle pieces to place before completion. First, we have price increases on parts and materials. Over the last calendar year, there has been a 19% increase on the cost of building materials.
Another thing affecting repair costs are supply chain issues. Building materials and parts required for auto work are becoming more difficult to attain. We started experiencing supply chain shortages when the pandemic hit.
According to CNBC, “most supply chain managers expect problems to continue at least through 2024”. If we continue to experience supply chain shortages and a higher amount of claims filed, this will greatly affect insurance rates.
What good is getting a repair without a worker to do the job? In October of 2022, there were 390,000 job listings in the construction industry. With the lack of consistent employment numbers in the industry, it causes longer wait times for claims to be completed.
This also is the case for the auto industry. Car dealerships and repair shops are struggling with the number of employees they have. With auto claims rising, more vehicles are being taken to shops for repairs, or people are visiting dealerships to replace. Depending on the severity of your repair, this can also cause an inconvenience of longer wait times to receive your vehicle.
Although insurance rate increases may be out of your hands, we hope this can help you understand why you might be seeing these higher premiums. One of the benefits of using an insurance broker is having more access to different carriers. If you would like to speak to one of our agents about any of your personal insurance needs, give us a call at (303) 279-9700, or fill out the form below.